The MIB was established in 1946 by agreement between the insurance industry and the government to provide compensation for injury or property damage to road users, caused by uninsured or unnamed drivers.
It is funded by a levy on each motor insurance company. Membership of the MIB is compulsory and they administer the fund. In addition, the MIB acts as a guarantor of the existence of insurance for UK motorists overseas and takes responsibility for handling claims arising from foreign vehicles in the UK. Also, for UK driver claims in Europe .
There are two agreements in place to meet the requirements of the RTA 1988, to ensure that innocent victims of road traffic accidents should not go without compensation. The latest version of these are:-
1. Uninsured Drivers Agreement (UDA) – July 2017
If there is no insurer for the responsible party, then the innocent victim’s claims will be met by the MID Central fund.
The compensation limits are as required by law: Unlimited Liability for Death & or Bodily Injury and £1,200,000 for
Property Damage. Limitations on the UDA are:
a. No subrogation against the MID allowed.
b. No own damage claims allowed.
c. No compensation to passengers who knew the vehicle was stolen or has no Insurance
2. Untraced Drivers Agreement – January 2017
This is also referred to as “hit and run” incidents. The first agreement came into being in 1972. It operates in a wholly different
manner than the UDA above in that there is no identifiable party at law to sue. The MID will investigate and make a decision on
compensation or NOT. If the claimant is unhappy with MID’s decision, they can appeal to an independent arbitrator who will made
a final, binding decision.
The MIB will be liable as follows:
a. If the claim is for death and or bodily injury
b. Property Damage, where the MID has also paid a significant injury compensation to a victim in the same incident
c. A £400 excess is applied for Property Damage claims. No subrogation allowed.
d. The Limitations Act 1980 applies:- 3 years to bring an action for injury and 6 years for property damage claims.
When a motor policy is taken out, the insurer acquires 3 sets of obligations:
1. Contractual – Under the terms of the policy
2. Statutory – part VI of the Road Traffic act 1988
3. MIB – under Article 75 of the MIB’s Articles of Association
If an insurer decides it cannot compensate an insured, it is very rarely that it can escape its statutory liability under the RTA. It will almost always retain an Article 75 liability under the MIB.
Article 75 is an agreement between the MIB and its members (insurance companies & syndicates). It is where insurers have voided a policy due to misrepresentation or nondisclosure of a material fact and it was entitled to do so. The insurers under these circumstances have agreed to meet the claim under Article 75.
In the above circumstances, the Insurer will have no liability under the RTA, and will pay the claim as an Article 75 insurer. If Article 75 did not exist, the MIB would have had to consider such claims.
Finally, when such occurs, the vehicle remains uninsured, the insurer will pay the claim from ITS own funds because of the Article 75 agreement. It cannot subrogate against the MIB but can take action against the policyholder